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Startup prime broker Hidden Road secures backing of big trading houses and crypto firms

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Hidden Road, a new prime broker focused on digital assets and foreign exchange has secured the backing of some of the world’s biggest trading houses and cryptocurrency firms, according to a report by Bloomberg.

Hidden Road, which was founded in 2018 by Marc Asch – formerly with Steven Cohen’s hedge fund SAC Capital and Point72 Asset Management – closed a $50 million funding round last month with support from Ken Griffin’s Citadel Securities as well as the investment arms of cryptocurrency exchanges FTX Trading Ltd and Coinbase Global Inc. The report cites Hidden Road executives as saying that hedge funds and some of the world’s top 20 banks are now looking to Hidden Road to secure access to trade or hedge their crypto risks.

Banks or other institutions that can’t hold digital assets directly, can use Hidden Road to post dollars as collateral in a “tri-party” setup with a custodian, and receive profits and losses in dollars. The firm’s clients can also trade with exchanges as well as liquidity providers including Virtu Financial Inc, Optiver BV and Wintermute Trading Ltd. 

Hidden Road doesn’t trade: it provides clearing and financing for the treading activities of its clients, having first started with foreign-exchange services before expanding into digital assets in October.

And the firm has plans to expand its service offering further with the addition of futures and options clearing. The goal is to allow hedge funds and proprietray trading firms, to lower borrowing costs for trading strategies by netting credit risk and positions across asset classes.

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